The declining fortunes of the Mainstream Media have led them to take increasingly unwise risks in the use of fraudulent documents and reporting, often in service of their benefactor and symbiotic partner, the Democratic Party. As a business strategy matter, the Mainstream Media would be better served accepting their declining fortunes, serving as “cash cows” for their parent companies, and avoiding risky behavior which could cause them an Arthur Andersen type crisis, or worse.

Some Business History

In the early 1970’s, Bruce Henderson, the founder of the legendary Boston Consulting Group, introduced one of the most famous analytical paradigms in the history of American business: the growth-share matrix (we are not overlooking the GE-McKinsey matrix as well).

The growth-share matrix describes different stages to a company’s life, or an industry’s, and provides a very useful heuristic aid for analyzing the differing requirements of businesses at various stages of their corporate lives. For example, strongly growing companies (“rising stars”) often should seek to maximize market share at the expense of immediate profits, because, over time, the highest market share companies are often the most profitable, and this goal of long-term profitability is much more important than making a fast buck.

Conversely, you have heard the term “cash cow,” and this term applies to a company or an industry which has become mature, and which should be milked for cash to feed other, faster growing, more attractive opportunies.

Many businesses have suffered greatly by not understanding where they stood, and where their industries stood, on the growth-share matrix.

Where do you place the Mainstream Media?

The Mainstream Media have been in decline for a quarter century, as this space has written about many times. The nightly news had 60 million TV’s turned on in 1980, and the total is 25-30 million today. The New York Times’ daily circulation of 1.2 million and the Washington Post’s circulation of 0.8 million are down approximately 10% over the last decade. These are businesses that should be milked as cash cows, according to the BCG formulation.

The all-too-human reluctance to see your own company/industry in decline

Number one companies in majestic industries take on imperial trappings unconsciously. As chronicled here, General Motors, US Steel, AT&T and many others have enjoyed the positions of power in their industries that CBS and the New York Times have enjoyed in the Mainstream Media. Vast bureaucracies support the senior executives, corporate resources — if not necessarily personal wealth — are plentiful, and the President will take your call. No one wants to give these things up, or wants to acknowledge that some of the usufructs of power are slipping away.

Also, in crass commerical terms, managing a declining business can be a lot less fun than managing a rising star. The budgets are much tighter, the Gulfstream V is replaced by Southwest Airlines, and staff cutbacks are much more common than expansions. Every executive wants to grow his company’s presence and influence, and to stave off decline, sometimes by any means possible.

Decline can lead to corruption, and often to fraudulent documents

There are plenty of ignoble, and sometimes downright criminal, things that corporate executives and decision-makers have done to prevent the declines of their companies. Enron, WorldCom, Arthur Andersen, Drexel Burnham, Rite-Aid, DeLorean, and so many others come to mind. But it would be a mistake to attribute entirely bad motivations to the people involved in these scams and fallen companies. Sometimes the worst abuses occur at the end of a slippery slope which began with the laudable desire to save a company, its mission, and its people.

As we have noted elsewhere, the first indicators of decline in a business are often met by denial — the conviction that the events are an aberration or are temporary. From there, corporations often deal with declines through stop-gaps — hiring freezes, cuts in discretionary spending, travel budgets slashed, the BYOB Christmas party. Simultaneously, corporations often focus on a “back-to-basics” strategy — improving relationships with the constituencies responsible for past success, such as customers and suppliers. Companies often try adding features to existing products to improve the range of products already accepted by their audience (one thinks of the gay marriage announcements or the campaign against Augusta in the NYT).

(Somewhat oddly, but completely understandably from a corporate culture point of view, companies whose decline has been caused by the success of new or upstart competitors almost never try to mimic the new product offered by the competitor, and if they do, usually they do so unsuccessfully.)

With disturbing regularity, unsuccessful efforts to stanch the decline of a company’s business end up in the same place: fraudulent documents. From Enron’s, Rite-Aid’s, or WorldCom’s financial statements, to phony and inflated newspaper circulation figures, the laudable desire to shore up a company often leads to the creation of a paper trail of fraud.

The success of the Mainstream Media is tied to the success of the national Democratic Party

By this point, everyone knows the statistics: the Mainstream Media’s inside the beltway contingent is 12 to 1 for Kerry, and Evan Thomas of Newsweek has famously said that the MSM would deliver 15 points to Kerry in his battle with Bush. Yet, despite this and many other examples (including the NYT ombudsman’s admission of the paper’s liberal bias), the Mainstream Media by and large insist they are not liberal. This is a puzzlement to conservatives and afficianados of the New Media, who readily admit that their triumverate of talk radio, Fox and the Blogosphere are notably conservative.

We offer here a partial explanation for the reluctance of much of the Mainstream Media to admit the obvious. Leading figures in the Mainstream Media do not want to admit that the status of their companies’ news divisions is dependent upon the success of the national Democratic Party. To the extent that the GOP sets a national executive and legislative agenda for a long period of time, the former agenda-setters in the MSM are reduced to the status of critics and commentators. This would be a massive reduction in their status and power, and hence they are driven to say, and undoubtedly believe, that their commercial success functions independently of that of the national Democratic Party.

Alas, for them, they are wrong. At some level, the Mainstream Media realize that their fortunes are inextrcably tied to the success of Democrats, and this space believes that understanding this is the key to understanding behaviors at the Mainstream Media that range from silly through slipshod to profoundly unethical.

Whatever it takes for Democrats to win: no reporting, slanted reporting, fraudulent reporting

No reporting

The silliest instance of no reporting may be Oompa Loompa, the orange man-tan version of John Kerry that was not a big story, but was funny, and was all over the internet and talk radio. MSM reporting was zero. Because it was an unworthy story? Perhaps, but perhaps because it made the candidate look silly.

By far the most important unreported MSM story of election 2004 has been the SwiftBoatVets. I won’t rehash it here, having written at length many times about it. However, it is critical to note their charges have been almost entirely unrefuted, and the charges reflect directly on the character of the Democratic candidate for President. The Mainstream Media have still, after two months, not directed a single set of questions to Kerry about the dozen serious charges made by dozens of his fellow Vietnam veterans. It is notable that while the Washington Post did a creditable (though tardy) job on the story, the New York Times both ignored and trashed the SwiftBoatVets’ story, as did the broadcast networks which took their cues from the NYT.

The New York Times (Nagourney/Stevenson) and Howard Fineman on the web both make the same point today: the current Bush attacks on Kerry involve distortions and taking things out of context in a way that goes beyond what Kerry has done. Kerry distorts, takes out of context, and mistakes all the time, but these are not central to his efforts to win. We have a responsibility to hold both sides accountable to the public interest, but that doesn’t mean we reflexively and artificially hold both sides “equally” accountable when the facts don’t warrant that.

Halperin apparently believes he should do our thinking for us, and let us know which items should be “central” to our forming a view of the candidates, since he represents one of the “few news organizations with the skill and strength to help voters evaluate what the candidates are saying to serve the public interest.”

Fraudulent reporting

Rathergate takes center stage as an example of fraudulent reporting. It is important not only for itself, and for the deep reluctance of CBS to take resposibility and retract its story (the phony memos are stillon the CBS website), but because it has revealed a thirty year pattern of dishonest and anti-war reporting on the parts of Dan Rather and his colleagues.

As serious as Rathergate, and far more subtle, are the polls put out be news organizations in recent days which apparently cook the books to misrepresent the presidential election in favor of the Democrats.

(1) The Newsweek poll of last week, which oversampled Democrats based on an apparent desire to show Kerry as the comeback kid, after previously oversampling Republicans just after the GOP convention. The polls used sampling methods designed to produce a swing of 14% from Bush to Kerry — notable in part because this swing was almost excactly the 15% promised by Evan Thomas of Newsweek many months earlier as the MSM’s contribution to the Democratic Party’s election campaign.

(2) The AP-Ipsos poll of Thursday, which used crazy sampling and weighting techniques to torture the numbers into a 4% lead for Kerry. As this space and DJ Drummond have pointed out, the poll is offensive to people knowledgeable of polling techniques, as well as common sense.

The Mainstream Media face a potential Arthur Andersen crisis

The Mainstream Media have not yet let it hit their consciousness that they have gone from rising star to cash cow, from agenda setter to loyal opposition, from buggy whip maker in 1895 to buggy whip maker in 1905 — though the awareness of the change is just below the surface. As a result, their attempts to improve their suituation as an industry have so far flopped. Notable among these was McCain-Feingold, or the Mainstream Media Empowerment Act of 2002.

As is typical of industries faced with decline, the Mainstream Media should be expected to continue to eschew market-based (hence painful) solutions in favor of legislative or regulatory palliatives for their situation. These may include: (1) further campaign “reform” legislation; (2) re-institution of the fairness doctrine; or (3) regulation of political speech in the blogosphere (perhaps by imputing an hourly rate to lawyers Glenn Reynolds or John Hinderaker as political contributions, or similar nonsense).

The Mainstream Media are in grave danger of an Arthur Andersen crisis. Their most valuable, perhaps their only valuable asset, is a reputation as trustworthy. Rathergate, the history that Rathergate has exposed, and the Rathergate-like use of fraudulent polls (and who knows what else that we just have not discovered yet) place the entire Mainstream Media industry on the edge of a credibilty implosion.

Worse still, the easy way that the criminally forged Rathergate memos made their way onto prime time TV is a dangerous warning sign. The ease with which fraudulent polls, meant not to entertain, but to influence the outcome of an election, make their way into TV, radio, and magazine news reports, is another sign that the internal quality control systems at so-called news organizations are not functioning or have been disconnected. Such abuses can sometimes find their way into the criminal justice system.

Declining industries are often their own worst enemies

By many accounts, Bernie Ebbers was just trying to save WorldCom when he took the first steps that led to filing a number of fraudulent SEC documents to keep his company afloat, leading to what Accountancy Age called “one of the sorriest chapters in US corporate history.” It would have been far better for Ebbers to accept the decline of WorldCom, even its bankruptcy, than to suffer personal ruin.

None of the Mainstream Media companies are threatened by bankruptcy in their declines, except if their reckless behavior itself forces a critical loss of news credibility or charges of intentional fraud. As a business strategy matter, the news divisions of the Mainstream Media should contain their expenses, merge with other broadcast news operations, cut back on risky and sensationalizing escapades, and focus on generating cash for their parent companies. The news operations would be well served, as would their executives, reporters and editors, by accepting their position in the growth-share matrix as cash cows, and stop, once and for all, trying to jump over the moon.

4 Responses to “The Mainstream Media and the Temptation to Corruption in Declining Industries”

An excellent summarization; very persuasive. In particular, the discussion of the incentive/motivation for much of the MSM’s observed behavior – success of DNC is success of MSM – resonated with me; I which you had expanded on it. Well done.

The MSM are cracking up because the “practitionsers” the journalists pruposely desecrate the turth, distort differences to distort conflict, make a virtue of obsecenity, Take the wrong side in th eguarrles of the day, destorye dpoint of reference and abandoned privacy. This model can be applied to almost any issue taken on by the MSM. In Iraq, they made up their own critieria for going to war and them tried their best to pass it off as the Bush Administration’s critiria. That failed. They distort differences to foster conflict. Again in Iraq they keep using the WMD arguments as a end all for success or failure. Not so. They used Abu Graib in an obscene way to tyr and hammer the Bush Administration, when it was Bush Administration and the DOD who actually broke the story by admitting the issue. It was not the MSM, despite trying, who exposed the story – it was our govnerment. They are openly supporting the Kerry Campaign and the democrat party. And they say they are trying to even out the distortion? They have destroyed points of reference by propagandizing that left wing liberals and themselves are the “mainstream in America.” They are so far left and they don’t even realize that the center of their universe is completely out of phase with America. They have abandoned privacy by goiong after their enemies by engaging in campaigns of personal destruction – the MSM are the most blatant practicers of destroying people with made up documentation. The MSM are delcining because of these things and the managerial decline is only envitible based on thier practices.

I’m an Executive Producer in a top 15 television market and I agree with every word you’ve written. I find it very frustrating as the lone voice of reason and fairness in my newsroom. Your comments on the Swiftvets are right on target. I can tell you, from my 14 years of experience in this business, that TV newsrooms are mostly run by anti-war ultra-liberals right out of the 1960’s. It’s as if Newsrooms are refuges for the liberal mindset.